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Public company info - Shenwan Hongyuan Group Co. Ltd. - H Shares , 06806.HK
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Shenwan Hongyuan Group Co. Ltd. - H Shares, 06806.HK - Company Profile
Chairman Chu Xiaoming
Share Issued (share) 2,504,000,000
Par Currency Renminbi
Par Value 1.0
Industry Securities
Corporate Profile Business Summary: The Company’s business mainly focuses on four segments, including enterprise finance, personal finance, institutional services and trading, as well as investment management. Performance for the year: In 2019, the Company realized total revenue and other income of RMB33,252 million, representing an increase of 37.92% as compared to the corresponding period of last year; profit before income tax of RMB6,927 million, representing an increase of 33.54% as compared to the corresponding period of last year; net profit attributable to shareholders of the Company of RMB5,735 million, representing an increase of 37.86% as compared to the corresponding period of last year; basic earnings per share of RMB0.24, representing an increase of 26.32% as compared to the corresponding period of last year; and the total equity attributable to shareholders of the Company amounted to RMB83,206 million, representing an increase of 19.89% as compared to the beginning of the year. Business Review 1. Enterprise Finance Business T argeting enterprise clients, the Group’s enterprise finance business consists of investment banking business and principal investment business. The investment banking business includes equity financing, debt financing and financial advisory, while the principal investment business includes equity investment, debt investment and other investment. During the Reporting Period, the enterprise finance business of the Company recorded total revenue and other income of RMB2,718 million, representing a year-on-year increase of 25.47%, including RMB1,219 million from the investment banking business and RMB1,499 million from the principal investment business. (1) Investment banking business In 2019, the total A Share equity financing amounted to RMB1,532.3 billion, representing a year-on-year increase of 26.57%; the total corporate bonds issued amounted to RMB2,543.9 billion, representing a year-on-year increase of 53.47%; and the total enterprise bonds issued amounted to RMB362.4 billion, representing a year-on-year increase of 49.87% (WIND, 2019). In the context of policies that support direct financing, the Company’s investment banking business actively served the capital market reform and the national strategy of scientific and technological innovation, seized market opportunities, and fully participated in the construction of the STAR Market. It grasped business opportunities for M&A and restructuring based on industrial logic. The Company develops a full range of fixed income financing businesses and continued to increase efforts on development of new projects to increase project reserves. In addition, it further focused on central enterprises, local state-owned enterprises and leading private enterprises, to consolidate and expand core customer groups and improve customer structure. During the Reporting Period, the Company completed 13 equity financing projects (including 3 IPOs and 10 refinancing projects) with a financing amount of RMB13.879 billion. In particular, “Anji Technology”, for the shares of which the Company was responsible for sponsoring and undertaking, was one of the first batch of enterprises listed in the STAR Market; six M&A and restructuring transactions were approved by the M&A and restructuring committee of the CSRC, ranking the fifth in the industry, up by 13 in ranking as compared with the last year; The Company also acted as the lead underwriter for 18 enterprise bond projects, ranking the seventh in the industry, with an underwriting amount of RMB9.229 billion, 61 corporate bond projects with an underwriting amount of RMB45.205 billion which doubled as compared with the last year in terms of the number of corporate bond projects and the underwriting amount, and the Company was thus rated as an outstanding lead underwriter of corporate bonds by the Shenzhen Stock Exchange. Besides, the Company acted as the underwriter for 493 local government bond projects with an underwriting amount of RMB32.483 billion, ranking the fifth in the industry. The Company recommended seven companies for listing and 40 private placement projects on the NEEQ, ranking the second in the industry. The Company ranked the first in the industry in terms of the accumulated number of enterprises for which the Company recommended for listing, the number of private placement projects and the number of enterprises subject to continuous supervision of the Company. By leveraging on the development opportunities arising from the deepened reform of the NEEQ, the Company has reserved a batch of enterprises with the plan for the selective layer. (2) Principal investment business The Company and certain of its subsidiaries including Shenwan Hongyuan Securities conduct the principal investment business. For the principal investment business, by fully leveraging on the advantages of the “investment holding group + subsidiary securities firm” two-tier structure, the Company reinforced the in-depth collaboration of “investment + investment banking” to provide comprehensive equity and debt financing services for customers through cooperation with investment banking, asset management and other businesses. During the Reporting Period, in respect of the principal investment business, the Company, relying on the capital market, actively promoted the business transformation and innovation, steadily expanded the business scope, enriched investment varieties, and further improved the asset allocation structure. The Company further strengthened the development of major customers and deepened the strategic cooperation with existing important customers, to establish and improve a major customer reserve bank and continuously broaden the breadth of cooperation; it continued to strengthen investment capacity building, actively served the development of the real economy, and strengthened risk management. Hongyuan Huizhi deepened business cooperation with strategic customers and core customers and actively cooperated with securities business, to provide customers with all-round comprehensive financial services and continuously consolidate the foundation of profitability. It proactively promoted real estate financial projects, consumer credit projects, accounts receivable projects, urban renewal projects, etc., expanded diversified investments, optimized asset allocation. In addition, the Company’s bond underwriting business was promoted through relevant investment projects. Shenyin & Wanguo Alternative Investment deepened the adjustment of asset layout, and focused on promoting the private equity investment, investment in private securities funds and investment in the STAR Market. During the Reporting Period, it completed the follow-up investment project of “Anji Technology” in the STAR Market, and good investment returns were achieved. Shenyin & Wanguo Investment strove to strengthen business cooperation with large groups, listed companies, and local governments, and its investment business developed steadily. Two investees have been listed, one investee has passed the IPO review, and two investees are in the process of application for IPO review. 2. Personal Finance Business The personal finance business of the Company mainly covers securities brokerage, futures brokerage, margin financing and securities lending, stock-backed lending and sales of financial products. During the Reporting Period, the personal finance business of the Company recorded total revenue and other income of RMB11,345 million, representing a year-on-year increase of 1.86%. (1) Securities brokerage business In 2019, the overall capital market picked up with the SSE Composite Index, the SZSE Component Index and the ChiNext Board Index rising by 22.30%, 44.08% and 43.79%, respectively. In 2019, the daily average trading amount in the Shanghai and Shenzhen stock markets reached RMB561,579 million, representing a year-on-year increase of 36.34%. The competition on commissions continued to intensify and the commission in the industry further declined. The Company’s securities brokerage business proactively seized opportunities in the market to increase the introduction of customer assets and efforts to activate assets through intensifying technology application, optimizing user experience, strengthening investment consulting construction, improving professional services, to accelerate the transformation to wealth management, and good achievements were made. As of the end of the Reporting Period, client’s assets under the custody of the Company amounted to RMB3.20 trillion, representing a year-on-year increase of 33.67% and a market share of 7.18%, ranking among the top in the industry; the net income from the Group’s agency trading business amounted to RMB3,023 million, representing a market share of 4.3276%, steadily ranking among the top in the industry. At the end of the period, the brokerage business had nearly 7.271 million retail customers, representing an increase of 11.04% as compared with the end of the previous year. The total number of investment advisors was 2,357, representing an increase of 27% year on year. The new securities accounts opened reached 710,800, representing an increase of 118.71% over the same period of last year. The iteration of Big Winner APP was accelerated, and more than 120 new functions and experience optimizations were launched in the year, with monthly active users reaching 1,121,100, representing a year-on-year increase of 61.13%. (2) Futures brokerage business The Company conducts the futures brokerage business through Shenwan Futures and Hongyuan Futures. In 2019, Shenwan Futures took the listing of new varieties of futures and options as the starting point, constantly consolidated the foundation of brokerage business, and kept on promoting the development of innovative businesses and transformation of the Company’s business structure, customer structure and income structure through product-oriented business, comprehensive financial business and risk management business. Due to its comprehensive and excellent performance in compliance operations, innovative development and serving the real economy, Shenwan Futures has been awarded the highest Class A Grade AA rating in the classified evaluation of futures companies by the CSRC for six consecutive years, and it has also been granted approximately 40 awards and honors by the financial industry, government authorities, exchanges and mainstream media etc., resulting in continuous enhancement of its position in the industry and brand awareness. In 2019, Hongyuan Futures further strengthened its business layout, further developed its new business, and applied for qualifications for fund sales business. Breakthroughs to varying degrees were achieved in terms of basis trading business, market making business, and options business. In particular, the market making business has gradually expanded to thermal coal, silver and cotton yarn futures and won the “Gold Award for Market-Making Business of 2019” from the Shanghai Futures Exchange; for options business, the on-the-exchange or OTC quotation model and business model were further optimized with the nominal principal up by 227.85% compared to the corresponding period of last year. The brokerage business continued to maintain the growth trend of customer equity, and the institutional transformation of customer structure showed obvious effects. The daily average customer equity and total customer equity peaked at a record high; with rich asset management business varieties and gradual embodiment of investment management capabilities, product performance improved significantly; the operation of self-own funds was proactive and orderly and the rate of return on investment with self-own funds was improved through asset allocation and timing allocation. Hongyuan Futures gave play to the driving role of the investment with self-own funds for business to promote its comprehensive business development and create a cooperation circle for the brokerage business and product business. Hongyuan Futures continued to strengthen compliance operations and maintained Class A Grade A rating in the classified evaluation. (3) Margin financing and securities lending business In 2019, the trading in the market was more active with an increase in clients’ demand for margin financing and securities lending business. As at the end of 2019, the balance of margin financing and securities lending business was RMB1,019.285 billion, representing an increase of 34.87% over the end of last year. During the Reporting Period, by fully leveraging on the position as one of the first batch of qualified brokers for securities refinancing business in the STAR Market, the Company accelerated institutional transformation of clients through capturing market trends, expanding the source of securities and vigorously introducing a private equity quantification team. As of the end of the Reporting Period, the balance of the Company’s margin financing and securities lending business was RMB51,710 million, and the market share was 5.05%. In particular, the balance of financing business was RMB51,055 million, representing an increase of 20.89% over the end of the previous year; the balance of securities lending business was RMB655 million, representing an increase of 31.03% over the end of the previous year, and the maintenance margin ratio of the Company’s margin financing and securities lending business was maintained at 268.72% on average. (4) Stock-backed lending business In 2019, all participants in the market have paid more attention to the prevention of risks of stock-backed lending projects and the market size of stock-backed lending business continued to decline. The business survival risk continued to be mitigated, and the incremental pledge by the controlling shareholders of listed companies has significantly reduced. During the Reporting Period, the Company’s stock-backed lending business actively responded to change in the market environment, and further strengthened project risk management, controlled the scale and adjusted the structure to promote business through a series of measures including optimizing business systems, tightened project access, strengthening concentration management, conducting business self-inspection, and implementing post-loan management. As of the end of the Reporting Period, the Company’s stock-backed lending business has a balance of RMB24,488 million, decreasing by 43.94% over the end of the previous year. The collateral coverage ratio of stock-backed lending contracts was 243.63% on average. (5) Sales of financial products business The sales of financial products of the Company includes financial products developed by ourselves and third parties, including asset management schemes, structured notes, mutual funds, private equity funds, wealth management products issued by commercial banks and other financial products. In 2019, the sales of financial product business line of the Company devoted great efforts to both the mutual funds and private equity funds to further strengthen the development and management of the Group’s own asset management schemes and explore the potential of structured notes. While conducting market-making services with fund companies for equity-based mutual funds, the Group vigorously promoted private equity business, placed the focus of development on product-type customers and built a quantitative private equity business ecosystem. During the Reporting Period, the Company’s total sales of the Group’s own financial products and third party products reached RMB63.899 billion and RMB46.594 billion, respectively. 3. Institutional Services and Trading Business The institutional services and trading business include prime brokerage services, research and consultation, FICC sales and trading as well as equity sales and trading business. During the Reporting Period, the Company’s institutional services and trading business recorded total revenue and other income of RMB17,166 million, representing a year-on-year increase of 93.66%. (1) Prime brokerage business The Company’s prime brokerage services consist of trading units leasing, PB System and fund administration services. In 2019, the Company further promoted the comprehensive financial services for institutional clients. Following the working strategy of “one company, one policy”, the Company put more efforts on major customers, proactively proceeded with development of private equity clients and deepened strategic cooperation with the wealth management subsidiaries of four major banks, striving to build a whole business chain of institutional business. In respect of trading units leasing, the Company leased trading units to the entities who are not members of stock exchanges and the revenue generated from units leasing amounted to RMB422 million, representing an increase of 3.97% over the end of the previous year, and the market share of income from units leasing was 4.2034%, maintaining in the top rank in the industry; as for the PB System business, the Company standardised the development of PB trading system to achieve full-market and full-variety coverage. As of the end of 2019, there were 487 PB System customers with a total scale of RMB114.1 billion. In terms of fund administration services, the fund operation outsourcing service of the Company passed the ISAE3402 international certification for two consecutive years, and during the Reporting Period, the Company obtained the qualification for custody of securities investment funds as administratively licensed by the CSRC. In 2019, there were 166 new private funds and custody and operation services under private asset management plan. (2) Research and consultation business The Company carries out the research and consultation business principally through SWS Research. In 2019, centering on the strategic direction of “specialization, platformization and globalization”, SWS Research held more than 40 quality conferences themed by “joint development of business using the platforms built through research”, and increased investment in international research, cultivated overseas research characteristics, increased overseas roadshow services and overseas joint research, to continuously improve research quality and market influence. SWS Research won the first place of “Local Gold Medal Research Team” and 23 individual research awards in the”13th Crystal Ball Awards For Chinese Sell-Side Analysts” sponsored by Securities Market Weekly magazine; the 4th place of the “The Most Influential Research Institutions”, and individual awards in 10 research fields in the “17th Best Analyst” sponsored by the New Fortune magazine agency. (3) FICC sales and trading business In 2019, in the face of the market environment with reasonable and abundant liquidity and wide fluctuations in the bond market, the Company’s fixed income and trading business accurately grasped the market trend with the rate of return on investment 11.1 percentage points higher than the average of open-ended pure debt funds at 99.7% percentile and the profit contribution hitting a historic new high again; the Company’s investment is stable and has achieved profit for 42 consecutive months as at the end of 2019, and is featured by controllable drawdown of net value and high stability of income; the distribution of debt financing instruments of non-financial enterprises continued to maintain a leading position. While maintaining the core competitiveness in the fixed income field, the Company has established a complete business line covering bonds, commodities and foreign exchange, and formed a cross-border, cross-market, and cross-business layout, to provide product design, trading organization, risk pricing, hedging transactions, liquidity support and other services for financial institutions and physical enterprises; it has successfully obtained the qualifications of market maker for interest rate option derivatives, credit derivatives, Bond Connect, funds listed on exchanges, etc., and continuously strengthens its comprehensive service capability of market making, to form a richer and more stable profit model. (4) Equity sales and trading business In 2019, in respect of equity investment, the Company continued to promote the transformation of traditional proprietary trading to the strategic goal of integrated trading and collaborative services, optimized the allocation of large-scale assets, and strengthened product creation to provide comprehensive financial services to clients, resulting in a stable increase in the overall profitability. During the Reporting Period, the return on investment of equity sales and trading business exceeded the average return of A-share market index and comparable mutual funds and the proportion of income from low- and medium-risk capital intermediary business increased significantly. Furthermore, the Company vigorously developed market-making business and obtained a number of important business qualifications including the main market maker of the Shanghai and Shenzhen 300ETF options from the Shanghai Stock Exchange, the main market maker of the Shanghai and Shenzhen 300ETF options from the Shenzhen Stock Exchange, the market maker of 300 stock index options of the Shanghai and Shenzhen from China Financial Futures Exchange and the market maker of commodity options (PTA, methanol) from Zhengzhou Commodity Exchange. During the Reporting Period, the Company completed market making for 14 mutual EFTs and all those meeting the rating standards of the Shanghai Stock Exchange and the Shenzhen Stock Exchange obtained the highest rating. Meanwhile, the Company was awarded the honorary title of “outstanding ETF liquidity service provider” for 2019 by the Shenzhen Stock Exchange. (5) Derivatives business In 2019, the Company continued to improve its derivative services for customers. Guided by customer needs, it vigorously promoted supply-side reform of products, to continuously enrich its product lines and strengthen its customer stickiness, and has formed a “product + trading + capital intermediary” profit model. At present, the Company’s derivatives trading business has covered more than 200 institutional clients including commercial banks, securities companies, fund subsidiaries, futures subsidiaries, private equity funds, and enterprises in the real economy. According to data released by the Securities Association of China, during the Reporting Period, the Company’s market share of OTC derivatives business was 12.3%, ranking among the top five in the industry in respect of cumulative scale. 4. Investment Management Business The investment management business of the Company consists of asset management, mutual fund management and private equity fund management. During the Reporting Period, the Company’s investment management business segment recorded total revenue and other income of RMB2,023 million, representing a year-on-year increase of 4.18%. (1) Asset management business The Company carries out the asset management business principally through Shenwan Hongyuan Securities, SWS MU, Shenwan Futures and Hongyuan Futures. In 2019, the Company’s asset management business, focusing on professional reforms and enhancement and transformation of active management capabilities, continuously accelerated system construction, and enhanced investment research capabilities and internal coordination. The strategic support positioning and the role of basic hub became more prominent. The continuous improvement of operating results and market influence laid a solid foundation for building a new brand of “all-asset special agency, multi-strategy boutique”. During the Reporting Period, in light of zero growth in the overall net income of the asset management industry, the Company’s net income from asset management business achieved rapid growth, ranking 5th in the industry, up by 1 position from the previous year; the revenue structure was further optimized and the revenue from initiative management business accounted for 86%, an increase of 11 percentage points from the previous year. In addition, the Company’s asset management business and key products have been further recognized by the industry. At the press conference of the Bank of China’s 2020 White Paper of Large-scale Asset Allocation, it was rated as the “Best Partner of 2019” for securities firms of asset management by the Bank of China; the “Baoying Jinli Series Collective Asset Management Plan” won the “2019 Most Popular Securities Asset Management Product by Securities Firms” at the Eastmoney Award. (2) Mutual fund management business The Company carries out the mutual fund management business principally through its controlled subsidiary SWS MU and its invested company Fullgoal Fund. In 2019, SWS MU achieved stable net value of funds and performance growth on the premise of effective risk control with the support of its seasoned investment research team. As of the end of the Reporting Period, the scale of assets under its management was RMB76.2 billion, representing an increase of 46% from the end of the previous year. SWS MU CSI 500 Index Selected Enhanced product and two SWS MU CSI 500 Index Enhanced products of the Company, ranked the top one and two among the same kind of CSI 500 Index Selected Enhanced products, respectively, which fully demonstrated the strong competitiveness of the Company’s quantitative investment ability in the industry. At the end of the Reporting Period, the scale of mutual funds under Fullgoal Fund’s management was RMB339.059 billion, representing an increase of over 70% over the end of the last year. It maintained excellent overall investment performance in various major categories of products such as active equity, quantitative index and fixed income. (3) Private equity fund management business In 2019, favourable private equity policies were introduced. The appearance of private equity asset allocation manager, the launch of fixed investment, the first inclusion in the negative market access list, and the accelerated entry of foreign private equity better helped the standardized development of the private equity industry. The Company carries out the private equity fund management business principally through Shenwan Hongyuan Industrial Investment, Hongyuan Huifu and Shenyin & Wanguo Investment. Relying on the capital market, the Company vigorously developed the private equity fund business, strengthened cooperation with key provinces and relevant listed groups, large state-owned enterprises, etc., to comprehensively serve the development of the real economy and industrial transformation and upgrading. In 2019, Shenwan Hongyuan Industrial Investment proactively leveraged the collaborative advantages of “principal investment + investment banking + research” to provide comprehensive financial services for key strategic customers, continued to strengthen customer channel construction and promote cross-border mergers and acquisitions, and proactively promoted collaboration among businesses including investment business and asset management business; Hongyuan Huifu further depended the business model of “development of Sichuan as a whole”, did a good job in launching and setting up relevant private equity funds, product filing, etc. and strengthened the management of subsidiaries, to ensure compliance of private equity fund business, with the focus placed on advancement of projects including establishment of bailout funds and industrial investment funds; Shenyin & Wanguo Investment fully exerted the role of private equity platform to strengthen cooperation with securities business, improved the integrated financial services business chain, vigorously strengthened cooperation with large groups, listed companies, local governments, etc. and placed the focus on the development of M&A funds, industrial funds and light capital equity funds. During the Reporting Period, the size of funds under the Company’s management increased by RMB2 billion. Prospects: (I) Industry landscape and trends 1. More prominent role of the capital market It was stressed at the Central Economic Working Conference that it’s required to further implement a proactive fiscal policy and a prudent monetary policy, accelerate the reform of the financial system, improve the basic system of the capital market, the quality of listed companies and the exit mechanism, steadily advance the ChiNext and NEEQ reforms, and strengthen the requirements on the reform and development of the capital market. As the Chinese economy enters a new stage of highquality development, the role of the capital market in optimizing resource allocation and serving the development of the real economy will be further highlighted. With the continuous launch of various measures to open the financial industry to the outside world, the capital market will have a huge room for expansion. 2. Further enhanced concentration in the securities industry In the context of the continuous improvement of the construction of a multi-level capital market system and the acceleration of the industry’s opening to the outside world, competition in the securities industry is becoming increasingly fierce, and the development of securities institutions is increasingly dependent on the improvement of their comprehensive strength. In this context, large securities firms have gained greater competitive advantages by virtue of their strong capital strength, comprehensive business layout, leading innovation capabilities and comprehensive risk control capabilities. The survival pressure of small and medium-sized securities firms will continue to increase and industry concentration will accelerate. As the head effects of the top ten securities firms are becoming increasingly significant, the market shares such as operating income and net profit will further increase. (II) Development strategy of the Company The Company’s strategic goal is to become a financial service provider which relies on the capital market, focuses on securities businesses, and is featured by “principal investment + investment banking”. The group company forms assets and realizes resource assetization through investment and diversified financial layout to fully support and serve the development of securities business; securities companies achieve asset securitization and securities transaction by improving product creation, service and transaction capabilities. The Company propels investment banking with investment, drives investment with investment banking, and connects buyers with sellers and investment with financing through products, to achieve effective connection of funds and assets and eventually become a financial service provider that serves the needs of the real economy and meets the needs of customers for comprehensive services. (III) Operation plan In 2020, the Company will closely follow the goal of creating a first-class investment holding group and a leading broker, adhere to the new development concept, and follow the general principal of “consolidating the management foundation, achieving key breakthroughs, and comprehensively improving the quality of development”. Relying on the capital market, all works will be fully implemented focusing on “Principal Investment + Investment Banking”. The Company will study and formulate the strategy for a new round of development, which will clearly define the strategic direction, implementation path and key measures of creating a first-class investment holding group and a leading broker, to guide development with strategy. Focusing on key regions, key industries, strategic customers and major customers, the Company will increase the synergy between investment business and securities business to enhance comprehensive financial service capabilities, and accelerate the transformation and upgrade of investment business, to create significant growth and profit support points for the company. In addition, it will accelerate the improvement of asset pricing, product creation and risk management capabilities, and promote the transformation of securities business to wealth management and institutional trading services, to create value-based and transactional investment banking. The Company will also strengthen the top-level design, advance the reform of systems and mechanisms, and promote the building of talent teams and capacities, to stimulate the endogenous power of the Company’s transformation and development and comprehensively enhance the Company’s market competitiveness. Moreover, it will improve the internal control and risk management system, to comprehensively strengthen risk prevention and control and ensure the sustainable and healthy development of the Company. The company will deeply analyze the profound changes brought about by the new COVID-19 outbreak to the current development environment, have a general understanding of the overall situation in a scientific way to actively respond to the shock, and adhere to “strong efforts on both aspects” of epidemic prevention and operation, to resolutely win the fight against the epidemic disease.

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